Proactive Investors - Run By Investors For Investors

Mackie Research maintains Buy rating on Point Loma with C$1 price target

Analyst Bill Newman also reiterated his price target of C$1 a share after the oil company's partner agreed to incur 100% of the costs to drill two wells in Wizard Lake Rex
oil rig
The Wizard Lake Rex project has net proven and probable reserves booked of 525 million barrels of oil

Mackie Research on Thursday maintained its Buy rating on Point Loma Resources Ltd (CVE:PLX) just hours after the Canadian oil company announced its partner on the Wizard Lake Rex oil project has agreed to a two-well farm-in transaction to fund drilling and set-up costs.

Analyst Bill Newman also reiterated his price target of C$1 a share, citing the transaction agreement under which Point Loma’s partner Salt Bush Energy Ltd will incur 100% of the costs to drill, complete and equip the two wells. Salt Bush currently has a 30% working interest in the project.

READ: Point Loma annouces new option with partner Salt Bush Energy to further delineate Wizard Lake Rex oil discovery

Newman noted it’s estimated that Salt Bush will pay C$5 million to drill the two wells for an additional 20% working interest in the Rex oil project. After drilling is completed, both companies will share a 50-50% interest.

“Point Loma has commenced construction of production facilities and expects to place the Rex horizontal discovery well onstream in early June 2019,” Newman wrote. “With facilities in place the two new Rex delineation wells could be on production in Q4/19 which could substantially boost Point Loma's oil production. We view this transaction as positive.”

The project has net proven and probable reserves booked of 525 million barrels of oil. Newman noted that “internal mapping indicates the Rex pool has the potential to hold 60 million barrels of original oil in place” on Point Loma’s land. He valued the production potential at $25 million for the Calgary-based company.

Point Loma’s stock recently traded flat at C$0.21 in Toronto.

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

View full PLX profile View Profile

Point Loma Resources Timeline

Related Articles

Gas facility
March 01 2019
Scott Kaintz took over as Curzon's chief executive in November
April 30 2019
The company was founded by industry professionals Garth Johnson, who is CEO, and Drew Cadenhead, president and chief operating officer
July 01 2019
Solo wants greater hands-on control in future and will become an operator, not just an investor

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use